Standing Committee B

[Mr. Nigel Beard in the Chair]

Enterprise Bill

Clause 163 - Advice and information

Question proposed [this day], That the clause stand part of the Bill. 
 Question again proposed. 
 Question put and agreed to. 
 Clause 163 ordered to stand part of the Bill.

Clause 164 - Further publicity requirements: Part 4

Nigel Waterson: I beg to move amendment No. 316, in clause 164, page 120, line 5, at end insert
'but should be published as soon after such action or decision as is reasonably practicable.'.
 Welcome back to our deliberations, Mr. Beard. We have been racing ahead; this morning the Government accepted a series of minor amendments tabled by me that have to be incorporated into a later stage of the Bill. I hope that my luck will hold. 
 This is an unobjectionable little amendment that would ensure that publication takes place soon. There is no earthly reason why it should not be done promptly but it is as well that it should be in the Bill. I cannot imagine any reasonable Minister having a problem with the amendment.

Melanie Johnson: The amendment would ensure that where reasons for decisions are not published at the time of the decision they are published as soon as is reasonably practicable after the decision has been taken. It is our intention that the requirement to publish reasons for decisions will increase the transparency of the operation of the regime; it will also increase the public accountability of the decision makers.
 Subsection (6) provides that where it is not reasonably practicable to do so, reasons are not required to be published at the same time as the decision concerned is taken. However, I assure the hon. Gentleman that it is implicit in the subsection, as it is in the rest of the clause, that the requirements to publish should be met as soon as is practicable. It is not therefore necessary to add to the provision and we do not want to treat it differently from the rest of the clause. I sympathise with the reasons for tabling the amendment, but it is unnecessary. In any event, we 
 shall act in accordance with the hon. Gentleman's wishes in this regard. I hope that he will ask leave to withdraw the amendment.

Nigel Waterson: I do not know what has happened to the Minister since we broke for lunch; she is in a much less amenable mood than she was. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendment made: No. 272, in clause 164, page 120, leave out lines 8 to 10.—[Miss Johnson.] 
 Clause 164, as amended, ordered to stand part of the Bill.

Clause 165 - Defamation: Part 4

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: You may remember, Mr. Beard, that we had a short debate on defamation under a different clause, the number of which escapes me. I do not want to repeat that debate but I said then that I was quizzical about whether we should apply a blanket privilege in terms of the law of defamation to what was done earlier in the Bill. Our deliberations in Committee and in the Chamber are subject to absolute privilege, as are court and tribunal proceedings, but there are significant risks attached to qualified privilege, not least because if malice is proved, an action for defamation can be taken.
 By way of parenthesis, one of the leading cases on parliamentary privilege involved a previous hon. Member for Wealden and the Church of Scientology. It established that parliamentary privilege is absolute in every respect, and I hope that my hon. Friend the Member for Wealden (Mr. Hendry) does not have go through any similar litigation during his long and distinguished career in this place. 
 I wanted to return to this subject because of the words 
''in the exercise of any of their functions under this Part.'' 
Anything that remotely approximates to a judicial process or is equivalent our deliberations, including matters such as a Competition Appeal Tribunal hearing or a formal investigation by the Office of Fair Trading or the Competition Commission, should attract absolute privilege. However, the clause goes too far in giving that privilege in 
''any of their functions under this Part.'' 
Some of the less important functions are not quasi-judicial or quasi-parliamentary and should attract only qualified privilege. There will be no risk at all to those involved if they say what they say on appropriate occasions and in the absence of malice. If there were an occasion—I cannot image one—when those conditions were not met, an action could properly lie. We are debating potentially highly explosive matters, including corporate reputation and share prices, in which ill-advised or malicious comments can have a disastrous effect on both individuals and companies.
 The clause is drawn too widely. I have explained why qualified privilege has a place in the Bill, and I will be interested to hear the Minister's thoughts.

Jonathan Djanogly: Do the proposals in the clause reflect existing legislation or do they differ from what exists?

Melanie Johnson: I am grateful for hon. Members' interest in the clause and I agree that there are some important issues.
 I should say first that the Fair Trading Act 1973 currently provides similar protection in undertakings and reports, and the clause will carry forward that protection and update the provision to ensure that all the authorities' functions are covered. Providing protection from actions for defamation is necessary to ensure that parties cannot seek redress from the authorities for statements that they made in carrying out their functions under the market's regime. That is why it is important that the measure covers all the functions of the authorities in question. 
 The procedures in the new legislation are different because we are seeking greater transparency and, as the hon. Gentleman will appreciate, a greater range of statements will be made. However, under the 1973 Act, the protection was attached to similar statements when they were made through Parliament, and we simply want to update the provision.

Jonathan Djanogly: Am I to understand that the extension means that the protection will not now cover statements only made through Parliament, but those made outside as well?

Melanie Johnson: Yes.
 Question put and agreed to. 
 Clause 165 ordered to stand part of the Bill.

Clause 166 - Investigation powers of OFT

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: We have concerns that echo those of the CBI about the breadth of the powers in clauses 166 and 167, which give the OFT powers during preliminary investigations. They seem excessive compared with those of other investigative bodies, when no offence has been shown to have been committed, and are more substantial than those in clause 184 to investigate cartels. They also exceed those provided by the Competition Act 1998. The CBI says:
 ''The powers are disproportionate and these clauses are unnecessary whilst the Competition Act is in place.'' 
We do not seek to scrap the 1998 Act during consideration of the Bill, but I suppose that the Government's argument is that we are trying to build 
 on those provisions instead. The powers appear to be extraordinarily wide, especially during preliminary investigations. The CBI continues: 
 ''It is the potential excessive use of these powers in combination with the widened scope to trawl through industry looking for conduct or structures that might be anti-competitive which is of such concern.'' 
We have already discussed the potential cost of such investigations and their impact on companies' resources. The CBI has a separate concern that such investigations might have an impact on the willingness of companies to do business in this country rather than anywhere else. There is a similar argument about wealthy individuals paying full British tax, which the Treasury is currently reviewing. It is difficult not to see the Treasury's argument in favour of their doing so. Those people, like the companies I mentioned, have enormous choice about where they do business. I would not like the clause and the powers that it provides to be seen as a way of discouraging companies from being set up in this country. 
 We agree with the CBI that the powers are disproportionate, especially during preliminary investigations, and I urge the Minister to reconsider them.

Vincent Cable: Will the Minister comment on a story this morning on the front page of the Financial Times, which I believe related to the powers under the clause? It may have come from elsewhere, such as the lobbies or her Department. It suggested that the Government intend the powers in the clause to provide for draconian actions such as telephone tapping and other surveillance techniques. The people who reported the story may have got it badly wrong, but the extent to which Government powers could be used alarmed me. I hope that the Minister will take the opportunity to refute the lurid story.

Melanie Johnson: On the CBI's claims, we believe that the powers are appropriate. I do not agree that they are tougher than those for cartel investigations. The monopolies regime grants the OFT powers of entry. We have replaced those powers with the power to require persons to attend at a specified time and place to give evidence. That is better tailored to the regime. The powers are similar to those for cartel investigations, but the market's power extends to requiring estimates and forecasts, as they are likely to be relevant to that type of inquiry.
 The story mentioned by the hon. Member for Twickenham (Dr. Cable) related to a criminal offence in relation to cartels, not to Competition Commission reports. That may help the hon. Gentleman to get the story straight. 
 Question put and agreed to. 
 Clause 166 ordered to stand part of the Bill. 
 Clause 167 ordered to stand part of the Bill.

Clause 168 - Investigation powers of the Commission

Mark Field: I beg to move amendment No. 158, in page 122, line 19, leave out paragraph (c).

Nigel Beard: With this it will be convenient to take the following amendments: No. 319, in page 122, leave out line 19.
 No. 320, in page 122, leave out line 20. 
 No 321, in page 122, leave out line 21. 
 No. 322, in page 122, leave out line 22. 
 No. 323, in page 122, leave out line 23.

Mark Field: I shall not spend too much time on this because in a sense much of the discussion has already taken place on clauses 105 and 106. [Interruption.] The Government Whip has a voice in this Committee for the first time. He suggests that the hon. Member for Twickenham will speak to the amendments. I should like to speak first, if I may.
 Given that the plan is to have a non-adversarial approach to this entire regulation it seems somewhat inappropriate to set out such strict penalties. We are therefore of the view that paragraphs (d), (e), (f) and (g) should be deleted. The hon. Member for Twickenham seeks to delete paragraph (c). We want to delete the commission's power to impose financial penalties if a person fails to provide evidence. Without necessarily rehearsing all the old arguments, I should be interested to see what justification the Minister has for a stricter regime in part 4, which deals with market investigations, compared with the perhaps understandably more strict regime in mergers.

Vincent Cable: There is an important issue here, namely the toughening of penalties in relation to the provision of evidence. The issue has been raised not just by the industry lobbies but by the Law Society, which was concerned about the significance of the law. There are two obvious reasons why evidence is withheld. One is deliberate obstruction, such as the Enron-Anderson type of problem that involved shredding and disappearing files. Clearly there is criminal intent in such cases and there is the power to pursue companies using the criminal law for contempt of court. That is right.
 Evidence is often not provided as a result of inefficiency, which can be on either side. It can be the inefficiency of the company in not giving sufficient priority to assembling the evidence, or it can be the inefficiency of the competition authorities in not programming their work and setting totally unreasonable demands for paper. What indication does the Minister have that there is a serious problem with this type of investigation and that without additional financial penalties the evidence will not be forthcoming? The people to whom I have talked about the Bill had no evidence that this was a problem. Perhaps the Minister could quote us some examples or some aggregate data to show that there is a problem.
 How could a company appeal if it was subject to a fine even though it believed that it had acted completely reasonably in the provision of evidence? The whole purpose of this type of investigation is to be non-adversarial and yet it builds a fine and penalty system into the process. Perhaps the Minister can talk us through it. How will an aggrieved company that feels that it has been unfairly penalised for inefficiencies that it did not commit argue its case?

Melanie Johnson: The purpose of the system of sanctions for not providing information to the competition authorities is to encourage prompt and full compliance with any reasonable requests for information that they make.
 The hon. Member for Twickenham asked whether there had been difficulties. We cannot give specific examples because of confidentiality, but I assure him that they are rare occurrences. I will come to the context in which the powers operate, which I hope will help hon. Members to see why we are resisting the amendments—as I shall be urging the Committee to do. 
 Under the existing monopolies regime, where the parties fail to comply with a formal request for information the Competition Commission can apply to the court for such non-compliance to be punished as if it were a contempt of court. The ultimate sanction for non-compliance is therefore imprisonment, but that would be an extreme response. We suspect that the contempt provisions in the Fair Trading Act have ceased to be a credible deterrent to non-compliance with the Competition Commission's information requests. 
 It seems more appropriate to encourage compliance by recourse to financial penalties. Our proposal follows the model in the Bill's merger provisions and the similar power of the European Commission to impose fixed and daily substantial penalties on undertakings that fail to comply with the formal decision requesting information in the context of the investigations under articles 81 and 82 of the EU treaty. 
 The power will be easier for the Competition Commission to use, not least because it does not involve applying to the court. It should therefore be a more credible deterrent than its predecessor. I stress the following points to reassure hon. Members opposite. 
 As I said in my opening comments, the Competition Commission does not expect to exercise this power frequently. In general it finds that parties to its investigations adopt a constructive approach to its requests for information. However, there are a minority of cases otherwise. The unco-operative approach of one or two firms can damage the inquiry as a whole. Other businesses suffer as much as the Competition Commission as a result of inquiries dragging on unnecessarily. We have provided a number of procedural safeguards to prevent the Competition Commission from misusing the power. It can be used only where the commission considers that a person has failed to provide information without reasonable excuse. There is a right to a full appeal to 
 the Competition Appeal Tribunal on the merits of the Competition Commission's decision to impose financial penalties. 
 The Commission will be required to set out its approach to using the power in a published policy statement in line with clause 105. The amounts specified in 107(7) are absolute maximums. It is unlikely that penalties would be imposed at that level save in exceptional circumstances. For those reasons I hope that the amendment will be withdrawn and I urge Members to support the clause.

Nigel Waterson: Will the Minister accept that it is not very helpful for her to say—no doubt convincingly from her point of view—that the powers will not be used often or unreasonably? We are giving the powers to someone else; in this case, officials who may be gung-ho about making demands. We must test all the powers that we give to others outside this place against the worst-case scenario. The hon. Member for Twickenham hinted that that would be a company doing its best, which was not ill-intentioned but felt that it was being put under unfair pressure to produce documents and information beyond the main scope of the inquiry.
 Against that test, we are leaving a great deal of discretion to the reasonableness of the officials involved. Any safeguards must be built into the legislation and not simply be assurances given in Committee—which, with respect, are utterly worthless—that the powers will not be used often, will be used reasonably and so on. There may be some safeguards in the Bill but they are not enough.

Melanie Johnson: Before the hon. Gentleman spoke, I was setting out a number of safeguards that are in the Bill to prevent matters from being pursued in the way that I think he is suggesting might happen. In any case, we do not expect the power to be exercised frequently. In fact, we expect it to be exercised infrequently, because it would be needed only in an unusual situation.
 None the less, a need exists, and it would be wrong of the Government not to make provision to meet that need if a couple of firms did not co-operate. As I have said, if inquiries drag on unnecessarily, other businesses could be damaged just as much as the commission. The provision is therefore sensible for all parties concerned, and I urge the Committee to resist the amendment if it is pressed to a vote.

Mark Field: We had a fairly full debate on this issue under part 3, so I am happy to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Mark Field: I beg to move amendment No. 324, in page 122, line 24, at end insert—
 '(1A) Section 105 shall, in its application by virtue of subsection (1) above, have effect as if section 105(1) were omitted.'.
 Again, the amendment covers ground that we have covered in the last few moments. In keeping with the non-adversarial approach underlying the market investigations that we have in mind, and the parallels that come into play, clause 105(1) should not be included. As hon. Members may recall, it gives the Commission, for the purposes of an investigation under the merger provisions, the power to 
''give notice to any person requiring him . . . to attend at a . . . place specified in the notice; and . . . to give evidence to the Commission''. 
With regard to market investigations, our view is that the powers that would remain intact in the rest of clause 105 would be sufficient. We certainly appreciate, and not just with Enron and other incidents in mind, that the offence of suppressing or destroying documentation that is set out in clause 106 needs to remain. Again, it is paralleled in clause 168. However, the provision goes one step further. If the investigative process in respect of market investigations as compared with mergers can be conducted through documents and without requiring individuals to appear before the commission in the way that is described, that should be made plain. 
 I should be interested to have some guidance from the Under-Secretary. I can understand why, for drafting purposes, clause 105 may simply have been transferred intact into clause 168, but does she really believe that there should be no difference between the provisions that apply to mergers and those that apply to market investigations? Does she not believe that those parties, be they individuals or companies, who are subject to the much broader range of market investigations should have a little more protection than those who are specifically subject to a merger investigation under part 3?

Melanie Johnson: The hon. Gentleman's points turn on the question of witnesses being required to attend. His line of argument surprises me, because many investigations require witnesses to attend, and there is a value to that requirement, in addition to information and documentation, so that the Competition Commission has effective access. That enables it to investigate and take properly informed decisions, which is right and proper. However, I emphasise again that we do not expect the commission to exercise the power frequently, because in general parties to its investigations adopt a constructive approach to its requests.
 The power is likely to operate only rarely, but it will help to ensure that investigations are completed in a timely manner. It may shortcut many other processes if the witnesses are present. We want to avoid delays, so it is right for the Competition Commission to have this power. It is valuable to be able to request that witnesses attend and bear witness on investigations. As I said, we do not expect those powers to be exercised frequently.

Mark Field: I return to Opposition Members' principled concerns about the powers being granted to the Competition Commission, the OFT and the
 Government more widely in respect of mergers and market investigations. Significant powers are being conferred and we are assured that they will be exercised only rarely. One of the main purposes of examining the Bill line by line in Committee is to receive reassurances. I accept that the Minister has provided verbal assurances, but if the powers were sparingly used over the years or even redundant, we would want the powers to be pared down. Given the similarities between this Bill and the Fair Trading Act, for example, we fear that the present provision might be used as a minimum template for future legislation.

Tony McWalter: Is the hon. Gentleman forgetting that the object of these powers is to stop people from rigging markets? That can deprive consumers of millions of pounds that they would otherwise not have to pay for goods and services, or sometimes drive good businesses that are trading fairly into the dust. I should be pleased if the hon. Gentleman would remember the object of having these powers.

Mark Field: Given that we have already had umpteen sittings, I hope that I am slightly aware of the ideas behind the Bill. I accept the hon. Gentleman's point, but it is a matter of principle for the Opposition—not just because we stand up for business; on the Proceeds of Crime Bill I stood up for individuals. The increasing creeping effect of more legislative powers can be insidious. When the next Bill intended to regulate markets and mergers investigations comes before this House in 10 or 15 years' time, the OFT's and the commission's powers will be used as a basic template. That is the nub of our concern. We have heard the Minister's assurance that the powers will be utilised only in exceptional circumstances, but we remain concerned. I am partly comforted by those assurances, but it is worth reiterating our concerns. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 168 ordered to stand part of the Bill.

Clause 169 - Review of decisions under Part 4

Nigel Waterson: I beg to move amendment No. 325, in page 122, line 37, leave out 'not'.
 This is a probing amendment, which I hope that the Minister can deal with swiftly. 
 Subsection (2)(a) deals with exclusion—from a review carried out by the Competition Appeal Tribunal—based on an imposition of 
''a penalty under section 106(1) or (3) as applied by section 168''. 
We simply wondered why.

Melanie Johnson: The amendment may be based on a misunderstanding of the purpose of clause 169(2)(a). The provisions are not intended to rule out the possibility of an appeal against decisions, but to clarify that such an appeal should be heard under the specific appeal provisions relating to penalties as set out in clause 110. They are applied to market investigation
 references by clause 168. If that is not the basis of the hon. Gentleman's misunderstanding, perhaps he will clarify it further, but I believe that I have answered his point.

Nigel Waterson: I am not sure that the Minister has identified my precise misunderstanding, but what she says sounds convincing enough for me to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 326, in page 123, leave out lines 10 and 11 and insert
'be entitled to review the substance of the decision, as well as the procedure by which that decision was reached'.
 This deals with an altogether more substantial concern that we have touched on before in a different context. In response to my previous amendment, the Minister confused an appeal with a review, which, however similar they appear to a lay person, are two different things. A review deals only with complaints about points of law or the procedural aspects of a decision. It allows no investigation into the substance of the case. There is no justification—we are emboldened in our view by the support of the CBI—for limiting tribunals to judicial review alone. It must be possible to review the substance of the matter as well as the mere procedure or points of law. That would give greater confidence to all involved in the procedures. It is a simple natural justice that the entire matter—I include procedural issues and points of law, but not only them—be capable of being examined again. Concern by any party that the matter has not been dealt with properly or that an improper conclusion has been reached justifies starting the procedure.

Jonathan Djanogly: As I see it—the Minister will tell me if I am wrong—companies are being given the power to take to the CAT what they would previously have taken to judicial review. The clause will not much advance a company's ability to gain an effective appeals process. Stringent new penalties are put in place, but they are not balanced by companies' ability to opt for proper appeals. We do not oppose using the CAT for this purpose—we encourage it—but we want companies to be able to go to the CAT on the basis of a proper appeal rather than merely judicial review.

Melanie Johnson: The Bill provides for parties who are aggrieved by decisions to have them reviewed by the CAT on the same grounds applied by the courts on application for judicial review. That position applies under the Fair Trading Act, whereby the Secretary of State's decisions are open to challenge on judicial review grounds. Judicial review remains the right jurisdiction for appeals against decisions taken in market investigations. Such a CAT review will ensure that the procedures followed by the authorities are fair, and that the parties were given the opportunity to put their case. It will also allow the CAT to examine any decision taken by the authorities to assess whether it was reasonable and proportionate.
 I am aware that under the Competition Act 1998 the parties have a full right of appeal against OFT decisions. However, there is an important difference between the two regimes. Under the 1998 Act, companies in breach of dominance prohibition or the restrictive agreements are breaking the law. The chapters 1 and 2 prohibitions are modelled closely on articles 81 and 82 of the EC treaty. Cases can therefore be evaluated against a defined prohibition by reference to a body of competition law and previous jurisprudence in the UK and the EU. It is therefore easier to assess whether the decision taken is objectively right or wrong. 
 Under the Bill, the decisions will be based on an economic analysis of the facts of each case by the authorities acting in accordance with their statutory duties. They will not be evaluated against the defined prohibition by reference to an existing body of substantive competition law and jurisprudence. That means that the authorities will exercise considerable discretion when taking any decision under the Enterprise Bill. It will be difficult for the CAT to assess whether a decision is objectively right or wrong. Such public law decisions are complex, and a review based on judicial review is appropriate.

Jonathan Djanogly: Is the Minister saying that the findings of the investigation cannot be wrong?

Melanie Johnson: No, I am not saying that. There is a mechanism for challenging decisions taken in relation to market investigation references. We must ensure that the process followed by the authorities in a market investigation was fair, and that the parties were given the opportunity to put their case. If the CAT considers that the challenge to the decision is justified when it applies the principles of judicial review, the original decision taker can be asked to reconsider. That is the most appropriate way to deal with the type of decision that will be taken under the clause. Therefore, I do not support the amendment.

Nigel Waterson: I want to make three points, which the Minister has not completely addressed. My hon. Friend the Member for Huntingdon made one of them when he intervened, and he is still making it from a sedentary position. As he rightly said, one must accept that in the real world the initial decision may have been completely misjudged, and not for procedural or purely legal reasons.
 We are going to all the trouble of setting up a highly specialised tribunal—the Competition Appeal Tribunal—which is unlike any other court or tribunal in the land, as it will have specialist expertise in these matters. The Minister says that the decisions will have been taken on economic and other grounds, and that it is all very difficult. The CAT above all tribunals should be able to judge these issues, especially whether they had been approached in the right way in the first instance. With respect, it does not help the Minister to refer back to the Fair Trading Act under which, as she rightly said, there is a possibility of a judicial review of a decision taken by the Secretary of State. It is difficult 
 to think of any other mechanism for challenging such a decision. However, we are setting up such a mechanism under the Bill. In the cart-before-the-horse way in which some of the issues are being debated, we will consider later in more detail the constitution and powers of the CAT, and how it will work. 
 We no longer rely on challenging a decision taken by the Secretary of State, as we are setting up that extra layer. I fail to understand why the Minister ignores that in her response to the amendment. We are not making much progress in changing the Bill in this respect, so I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 169 ordered to stand part of the Bill.

Clause 170 - offences

Jonathan Djanogly: I beg to move amendment No. 327, in page 123, line 24, leave out
'and 117 (offences by bodies corporate)'.
 The CBI brought this relatively small issue to our attention. Clause 170 deals with offences and provides that the mergers clauses dealing with false or misleading information and offences by bodies corporate apply also to the market regime. It has been suggested that the words ''and 117'', referring to clause 117 on offences by bodies corporate, should not be included. I would be interested to hear the Minister's comments.

Melanie Johnson: The clause is a standard provision. Under a similar section in the Competition Act 1998, section 72, where a body corporate has committed a relevant offence, an officer of that body corporate is also guilty if it is proved that the offence was committed with his consent or connivance, or resulted from neglect on his part. Without that power, as the hon. Gentleman urges, it would not be possible to hold a person responsible for the offence, committed by consent, connivance or neglect, of providing the Competition Commission with false or misleading information.
 There should be a strong incentive for officers of bodies corporate to assist the Competition Commission in its investigations. The amendment would be detrimental to its investigative powers. I therefore hope to persuade the hon. Gentleman to withdraw his amendment.

Jonathan Djanogly: Having heard the Minister's assurances, I beg the Committee's leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 170 ordered to stand part of the Bill. 
 Clauses 171 and 172 ordered to stand part of the Bill.

Clause 173 - interpretation: part 4

Nigel Waterson: I beg to move amendment No. 328, in page 124, line 31, at end insert
'and includes a local authority or a public body.'.

Nigel Beard: With this we may discuss amendment No. 136, in page 124, line 34, after 'is', insert—
'(a) a consumer of goods or services whether publicly or privately provided.'.

Nigel Waterson: The CBI raised this issue, which has wider ramifications. The amendment seeks to clarify that the provisions would cover public bodies such as local authorities. I have a distinct memory of debating the issues when shadowing local government, particularly when the Local Government Bill was going through its stages. There is an increasing desire in local government to get away from the old ultra vires doctrine and to be permitted to trade and find other ways of producing income. This is the other side of that coin.
 The borough of Westminster was particularly active in lobbying on this issue because of the other opportunities available to it in terms of charging film companies, and so on. Local authorities can boost their income in ways other than holding out their hand to central Government for grants—we know that the level for specific grants has gone up exponentially under this Government—and increasing council taxes, and so on, in these days of continued capping, although under a slightly different system. 
 In its context, this is laudable. Local authorities are looking for innovative ways to raise revenue, or engaging in activities which could loosely be called trade, which they are capable of doing—no one wants to encourage them to go into things that they are plainly not cut out for. However, every silver lining has a cloud, and the other side of the equation is the concern of the CBI and others about unfair competition. It is a little like the concerns that we occasionally hear from our local chamber of commerce about the explosion in the number of charity shops. There is no difficulty if they are genuine, but certain charity shops buy in their produce and operate much more commercially, sometimes using their inbuilt advantages to compete unfairly with genuine local businesses. That is a slightly different illustration of the point. 
 We must not allow, even unintentionally, public bodies of whatever sort to be outwith the potential investigations. I have mentioned local authorities as perhaps the best example, but I am sure that hon. Members can imagine others. The amendment would ensure that market investigations can apply to publicly owned bodies that may operate as I have described, including by selling goods or services for gain. 
 Other examples include potential mixed markets in which both private and public businesses operate. They span health care, hospitals, postal services—we have seen the recent proposals from that industry's regulator—and even the defence sector. The CBI has a 
 fair point, which is that if such bodies operate in a commercial environment, they should be treated like any other market operator by the competition rules. It is a fair point. It may not have a practical effect on many organisations but, as I said earlier, there is increasing pressure for local authorities to be more involved in commercial activities and for them to be allowed to be. 
 I recall that there was a Green Paper floating around when I left the job of shadowing the Minister responsible for local government, which may have been firmed up into a White Paper by now. The Government did not seem unsympathetic to the cause. There is also a growing trend of a mixture of public and private provision across our public services. There is a big debate to be had on that, but not today. On that basis, I commend the amendment to the Committee.

Vincent Cable: The hon. Member for Eastbourne (Mr. Waterson) has a point, which is practical rather than a matter of public sector versus private sector. After the changes of the past 20 years, there is not much public enterprise left. Those that remain include the Post Office, which is covered by a separate regulatory regime and we have discussed how that fits in with this Bill, and the BBC, which is currently being debated Downstairs in the context of the draft communications Bill. There are areas in which Government quangos and public entities are being encouraged to operate commercially, and that presents a competition policy problem.
 One example, with which I am familiar because of its impact on a company in my constituency, relates to the Department of Trade and Industry and Companies House, which is a public provider of data about companies. It generates the data, transforms it and has been encouraged to sell it into the market. At first sight, getting Companies House to earn some money seems admirable, but there is already a small private sector industry of companies that buy data from Companies House, transform it through sophisticated computers and data processors, and sell it into the market. Those companies have found themselves in the awkward position of buying data from Companies House at a higher price than Companies House charged to its own marketing division. That problem may have been resolved by now, as it was raised with me two years ago, but it illustrates the kind of dilemmas that arise. 
 The same problem arises with Ordnance Survey, another Government agency that the Government encouraged to be more commercial before they realised that private companies were in the business of using the mapping data on a commercial basis. I do not argue about the rights and wrongs here, but there is a rather awkward borderline between the public and private sector in those little niches of the market. It is important that competition is fair and is seen to be fair and that the Government entities operate on the same basis as their private sector competitors. If the amendment manages to capture that problem, even if it is a rather limited one, it has a good deal of value.

Ken Purchase: I strongly believe that local authorities and other bodies, which in essence cannot go bankrupt, should not compete in the private sector for the sale of goods and services of whatever kind. I am a strong supporter of the mixed economy and I believe that competition should be fair. I have no problems in saying that local authorities and other public bodies should be subject to similar rules of the game. I am concerned, however, that the hon. Member for Eastbourne mentions charities. While it is also true that an element of unfair of competition can obtain in the circumstances that he described, charities and other voluntary bodies have to adhere to so many rules and obligations that we are in danger of loading the system to the point where people will no longer volunteer.
 I am an honorary parliamentary adviser to the British Healthcare Association, which has come under the scrutiny of the Financial Services Agency. While matters have been resolved, the problems of getting to grips with the new requirements for an essentially non-profit-making charity assisting people with their health care within the national health service resulted in considerable expenditure. Others in the charitable field are concerned about the way that they are being brought under the aegis of bodies like the FSA. If this measure were extended to charities it would be another disincentive to people volunteering for what are often important additions to our social life.

Jonathan Djanogly: It seems unfair that the public sector should not be included in the market investigation regime. The hon. Member for Twickenham made a good point. It is not a question of public against private here, but the public sector acting as a private sector body, which is now possible within the law and is increasingly being encouraged by the Government. I do not say that that is necessarily a bad thing. Let us take one example. There has been talk of the NHS buying up private hospitals, either in total or the use of all or a percentage of their beds. A monopoly provider will move into the private sector and compete from a massively dominant position.
 Considering that the health service will have an extra £9 billion after the tax increases to play with, that is a massive block compared with private sector competitors. In that context it is a very relevant issue. The NHS is the largest employer in the world. It is a massive corporation, with massive monopoly purchasing power. If policy changes, as it seems to be doing, so that it can compete with the private sector, it should be subjected to the regime outlined here. If the amendments are not carried, I hope that the Government will think about the issue more carefully. That has come across from all hon. Members.

John Pugh: I am all in favour of people thinking about the issue a lot more carefully and I listened carefully to what the hon. Member for Eastbourne said. He gave me the sense that we are debating a limited kind of application; that it could apply to public bodies only in so far as they operate in the commercial environment.
 The hon. Gentleman then went on to describe situations where traditional local authority services have rivals in the private sector, so it seems to me that the amendment could embrace almost any public body activity where there is, in theory, the opportunity of a private enterprise providing a similar or analogous service. If that were the case, would it apply right across the board to the whole range of public sector bodies and their operations? 
 The hon. Member for Huntingdon talked about the public sector acting on a private sector basis. I am not aware, however, that it is always entirely clear when a local authority is or is not doing that. I think it would be accepted, therefore, that an anxiety would be that we might apply it to areas of public sector operation where there are no customers—there are citizens—and where there are no actual profits. However—

Nigel Beard: Order. This is a rather long intervention.

John Pugh: I accept that.

Jonathan Djanogly: This is a fascinating and complicated area, and the hon. Gentleman makes points that should be considered in that context.
 I end by saying that if the Government—

Nigel Waterson: Following on from the previous intervention, this is an interesting train of thought. Would my hon. Friend care to comment on a situation where a hospital, for example, decides to subsidise its mainstream activities by taking in laundry from people other than its patients and to turn that into a business to create income? What would be the position if it entered into arrangements that were anti-competitive with private laundries in a particular locality? Which side of the line would that take us?

Jonathan Djanogly: My hon. Friend makes a good point. I remember that in Westminster we contracted out collections from parking meters and serviced collections from other councils' parking meters. We did that as an ancillary service to the existing service, which as the law currently works in local government, was all that we could do. If, however, the Government changed it—I think that there are proposals to do so—so that councils can provide services, clearly problems may occur with competition in terms of public money being used, in effect, to corner the market. Those are relevant considerations here.
 If the amendments are not passed, I should be interested to hear the Under-Secretary's response to whether, if a public hospital had some private beds, as many do, it would be caught within the regime? If the public hospital increased its private beds to 50 per cent., would it then be caught within the regime? What I am interested to hear, as things stand, is whether the extent to which a public body involves itself in private activities has any bearing on whether it is caught within the definition of business.

Huw Irranca-Davies: The way in which the clause is worded would seem to include most trading enterprises whether they are in the public sector, the charitable sector or the private sector. The amendment, which includes the words ''a local authority'', would seem to encompass the whole remit of what a local authority does.
 Ultra vires and charitable status have already been referred to, but let me give an example other than hospitals. If a college was, in effect, trading as a charity, neither in the public nor the private sector, but having, as part of its enterprises, summer schemes that it operated out of its sports facilities under a separate trading arm, a separate trading enterprise, my interpretation of the wording of the clause is that those would be included. The same is true if a local authority has a dual-use sports centre. The operation is similar. It provides activities for schoolchildren during the day, but becomes a commercial operation in the evening. The amendment would extend the clause to cover the complete reach of the local authority beyond its simple trading. Will the Under-Secretary clarify that point?

Tony McWalter: My hon. Friend the Member for Ogmore (Huw Irranca-Davies) anticipated one of my points. However, it is important to recognise that some of the analogies that have been used are inappropriate. It is not clear whether there is a market in health care in all circumstances. The NHS is predicated on the idea that someone is entitled to health care if they need it, and the cost of meeting that care will be provided, regardless of whether they have any market power or the capacity to purchase. That raises different issues from the question of whether a market obtains.
 On local authority services, the object of the best value regime is partly to try to ensure that a local authority will not undertake to deliver services if another party, such as another local authority or a private company, could deliver them more effectively, thus literally giving best value. In the special circumstances of the public sector, the market is unquestionably imperfect. So far as health care is concerned, it is good that it is imperfect, as it means that people who do not have market power nevertheless receive the service. There is therefore a surrogate—best value—system in the public sector that has the effect of subjecting public bodies to market forces so far as it is appropriate. This might be another case in which we look to legislation outwith the Bill to deal with some of the concerns expressed by hon. Members. I agree with many hon. Members that it is important that such market disciplines are used to ensure that consumers are not ripped off by the public sector any more than they should be by the private sector.

Melanie Johnson: The amendments seek to expand the definitions of consumer and business for the purposes of market investigations. We are in danger of losing sight of that. Amendment No. 328 deals with the definition of business, which in clause 173
''includes a professional practice and...any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge''.
It is important to understand that that means that the goods or services that are publicly provided commercially will be covered.

Nigel Waterson: The Minister rather skated over the word ''or'', which is crucial as it appears that there are two alternative tests. One is that an undertaking is being carried out for gain or reward—in other words, commercially—the other is a much lesser test:
''or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge''. 
That eliminates the NHS at a stroke, unless the Government have further plans to which we are not yet privy. It certainly does not cover undertakings that are being carried out commercially.

Melanie Johnson: I will elucidate the definition of business, which is the same in the Bill as it is in the Fair Trading Act. Hon. Members will all be interested in the NHS in this context. In a recent merger case, the Heart hospital in London was sold by its private owners, Gleneagles Hospital UK, to the national health service. That shows that the definition of business catches NHS trusts when operating on a commercial basis. The OFT investigated the merger and did not refer it to the Competition Commission because no competition problems arose. It fell within the appropriate definitions. Amendment No. 328 is therefore unnecessary.
 The hon. Member for Twickenham spoke to amendment No. 136. The definition of consumer mirrors that of existing Fair Trading Act provisions in part 3. It is included for the purpose of the definition of customer, which is also used in part 4. ''Customer'' includes a customer who is not a consumer. Consumer is defined by the clause as any person who is either 
''a person to whom goods are or are sought to be supplied (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them; or . . . a person for whom services are or are sought to be supplied in the course of a business carried on by the person supplying or seeking to supply them; and who does not receive or seek to receive the good or services in the course of a business carried on by him''. 
That definition already covers consumers of goods and services whether publicly or privately provided as long as they are goods and services supplied in the course of a business. 
 The amendment faces two problems. First, it would go further in encompassing consumers of public goods and services irrespective of whether they are provided on a commercial basis. As it stands, the definition covers goods or services that are publicly provided on a commercial basis, as I explained. I would not want to widen the definition to include those publicly provided with goods or services for free or on a non-commercial basis. Secondly, the amendment would extend the definition of consumer to any person who is privately supplied with goods or services, which we believe is an inappropriate extension of the definition. 
 In the light of my full explanation of both amendments and their relationship to the existing clause, I hope that I can persuade both Opposition Members to withdraw their amendments.

Nigel Waterson: I am not wholly convinced that the Minister changed course in response to my helpful intervention. We can accept that anyone carrying out an undertaking in the course of a business should be caught by the definition, but I part company with the Minister when she talks about a commercial basis. An enterprise may not be carried out on a commercial basis, in the ordinary sense of the term, and may make a nominal charge or one below what would normally be charged, but the only way to fall outside the definition is to charge nothing at all—or no money, which would remove the NHS as we bequeathed it to the Government.
 We get into murkier waters where public bodies set up an operation that is usually carried out by commercial bodies, but do not charge a proper or full rate. As long as they charge something, however nominal, we believe that they should be covered by the definition. On one reading they already are, but the Minister's attempt to explain it by stressing ''on a commercial basis'' undermines her own case.

Huw Irranca-Davies: By way of a straightforward observation, I doubt whether the hon. Gentleman would want to extend his amendment to cover aspects of local authority provision or, by logical extension, charitable provision that tackles social need where the market would usually not step in. Much regulation already defines commercial and trading activities and where the local authority or charity should keep away from filling a gap that the market could easily step in on. The worry with the amendment, and the logic of it, is that there should be an extension to the voluntary sector and that all aspects of its concern and business would then be covered. That might have the effect of deterring such bodies.

Nigel Waterson: The hon. Gentleman makes a fair point, but I have two comments in response. First, the ground is shifting under us with regard to what local authorities are or are not allowed to do now or in future, and the basis on which they will be able to do things and charge for them. Secondly, all that we are setting out is the possibility of people being involved in the provisions.
 At the end of the day, there still has to be evidence of anti-competitive activity and a prima facie case for a full investigation. As I said initially, it seems extremely unlikely that any of the bodies that we are talking about would get involved in such a situation. However, it would be wrong for the definition, or certainly the Under-Secretary's interpretation of it, to exclude them from an investigation if they were engaged in prima facie anti-competitive activity. As I said, her introduction of the expression ''on a commercial basis'', which is not reflected in the clause, has muddied the waters, but we have debated the issue long enough.

Vincent Cable: I am still a little baffled as to what precisely ''on a commercial basis'' means. We know that some public entities, such as the Export Credits Guarantee Department, operate on a commercial
 basis, which means covering their costs. Others, such as London Transport, also operate on a commercial basis, but have to earn a 6 per cent. return on capital. The phrase is used in a varied way in the public sector, and the precision that the Under-Secretary seeks in the clause is still not there. However, I shall not press my amendment to a vote.

Nigel Waterson: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 173 ordered to stand part of the Bill. 
 Clause 174 ordered to stand part of the Bill.

Clause 197 - Power to modify schedule 7

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: Again, there is an echo of something that we have debated before. We object in principle to the Secretary of State's having the power to modify by statutory instrument schedule 7. It contains some important provisions, even if they are tucked away in a schedule. We make no complaint about that, but if there are significant changes to what is set out in the schedule, due consideration should be given to them at all stages by the House. We have made a similar point before, and I do not wish to labour it, but I should like the Under-Secretary to justify why the Secretary of State should have that power.

Melanie Johnson: Through the work of the Committee, we are trying to ensure that the Bill will stand the test of time. It is therefore important that the list of remedies can be amended over time to reflect market developments. One example is that we have changed the list to allow authorities to specify how information should be published. They could specify that it should be published on the internet, which is obviously a new development since 1973. There may be similar developments in future.
 To reassure the hon. Gentleman, I point out that a modification requires an affirmative resolution of both Houses of Parliament. The provision is necessary, however, to provide the right degree of flexibility in the legislation to reflect changes and market developments that might take place over a considerable time. 
 Question put and agreed to. 
 Clause 197 ordered to stand part of the Bill.

Nigel Waterson: The hon. Gentleman makes a fair point, but I have two comments in response. First, the ground is shifting under us with regard to what local authorities are or are not allowed to do now or in future, and the basis on which they will be able to do things and charge for them. Secondly, all that we are setting out is the possibility of people being involved in the provisions.
 At the end of the day, there still has to be evidence of anti-competitive activity and a prima facie case for a full investigation. As I said initially, it seems extremely unlikely that any of the bodies that we are talking about would get involved in such a situation. However, it would be wrong for the definition, or certainly the Under-Secretary's interpretation of it, to exclude them from an investigation if they were engaged in prima facie anti-competitive activity. As I said, her introduction of the expression ''on a commercial basis'', which is not reflected in the clause, has muddied the waters, but we have debated the issue long enough.

Vincent Cable: I am still a little baffled as to what precisely ''on a commercial basis'' means. We know that some public entities, such as the Export Credits Guarantee Department, operate on a commercial basis, which means covering their costs. Others, such as London Transport, also operate on a commercial basis, but have to earn a 6 per cent. return on capital. The phrase is used in a varied way in the public sector, and the precision that the Under-Secretary seeks in the clause is still not there. However, I would be happy for the amendment to be withdrawn.

Nigel Waterson: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 173 ordered to stand part of the Bill. 
 Clause 174 ordered to stand part of the Bill.

Clause 197 - Power to modify schedule 7

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: Again, there is an echo of something that we have debated before. We object in principle to the Secretary of State having the power to modify by statutory instrument schedule 7. It contains some important provisions, even if they are tucked away in a schedule. We make no complaint about that, but if there are significant changes to what is set out in the schedule, due consideration should be given to them at all stages by the House. We have made a similar point before, and I do not wish to labour it, but I should like the Under-Secretary to justify why the Secretary of State should have that power.

Melanie Johnson: Through the work of the Committee, we are trying to ensure that the Bill will stand the test of time. It is important that the list of remedies can be amended over time to reflect market developments. One example is that we have changed the list to allow authorities to specify how information should be published. They could specify that it should be published on the internet, which is obviously a new development since 1973. There may be similar developments in future.
 To reassure the hon. Gentleman, I point out that a modification requires an affirmative resolution of both Houses of Parliament. The provision is necessary, however, to provide the right degree of flexibility in the legislation to reflect changes and market developments that might take place over a considerable time. 
 Question put and agreed to. 
 Clause 197 ordered to stand part of the Bill. 
 Clause 199 ordered to stand part of the Bill.

Clause 175 - The Competition Service

Melanie Johnson: I beg to move Government amendment No. 341, in page 128, line 9, leave out 'the Competition Commission and'.

Nigel Beard: With this it will be convenient to take the following: Government amendments Nos. 342 and 343.
 Motion to transfer clause 175. 
 Government amendments Nos. 345 to 352. 
 Motion to transfer Schedule 10. 
 Government amendments Nos. 355 to 369. 
 Government new clause 8—Annual report of Commission.

Melanie Johnson: It will be helpful if I set out briefly the reasons behind the changes proposed in this group of amendments.
 We have tabled the amendments with a view to guaranteeing the complete independence of the Competition Appeal Tribunal from the Competition Commission. The Government have always intended for the two to be fully independent of one another. Indeed, the Competition Commission appeals tribunal—the CAT's precursor—is part of the Competition Commission. That raises no conflict of interest at present, because the CCAT hears appeals only against the decisions of the OFT in cases under the Competition Act 1998. 
 We wanted the CAT to review the work of the reporting side of the Competition Commission in mergers and market cases, so we decided to separate the membership of the existing Competition Commission so that appeal panel members would be members of the separate body; the Competition Appeal Tribunal. That was why we initially proposed to create the Competition Service to act as a support body to the Competition Commission and the CAT, providing staff and services to both. However, we examined the structure further, saw that it was a little cumbersome and concluded that we should take this opportunity to amend the arrangements to separate entirely the Competition Commission from the CAT. 
 The Competition Service will now provide support services only to the Competition Appeal Tribunal, while staff employed directly by the Competition Commission will provide support services for it. It is for those reasons that I have tabled the amendments.

Andrew Lansley: When the Under-Secretary wrote to Committee members, she said that it was impossible for the CAT directly to employ its own staff. Why is that the case? If they could, we would not need the slightly excessive process of having a Competition Service in order to have a Competition Appeal Tribunal.

Melanie Johnson: Our advice is that that would not be appropriate, so a non-departmental public body is required to act as the employer of the CAT staff.

Andrew Lansley: The Under-Secretary may believe that it is appropriate or inappropriate, but she wrote to us to say that the CAT is unable to employ its own staff. Am I right in thinking that the CAT as a judicial body is unable to employ its own staff? Rather than the complex procedure of having the Competition Service, would it not be simpler for the CAT to be serviced by staff from somewhere such as the Lord Chancellor's Department?

Melanie Johnson: The CAT is unable to employ its own staff and needs a separate legal entity. By preserving the Competition Service, we will preserve the current level of independence for the tribunal. The Competition Service plays the role of the Competition Commission in the current set up.

Nigel Waterson: Like my hon. Friend the Member for South Cambridgeshire, I am trying to be helpful. However, this question might seem simplistic in the context of the Bill. Why is it impossible for the CAT to be like any other court and be serviced by the Court Service? It is wholly independent, funded ultimately by the taxpayer and does a perfectly reasonable job—although not always as good as it should—in running the nuts and bolts and pay and rations side of the court system.

Melanie Johnson: First, it is not normally the case for tribunals to employ staff because of the difficulty of identifying who is a party to a contract. Furthermore, the tribunal only exists when it is constituted for a hearing. The hon. Member for South Cambridgeshire asked who could have provided the facility separate from the tribunals. The Lord Chancellor's Department could have done that, but it has not expressed any interest in doing so.
 We believe that the arrangements are appropriate. They ensure the independence of the Competition Appeal Tribunal, and that it is supported by the right kind of separate legal entity to deal with the employment of staff and other relevant issues.

Nigel Waterson: I was not intending to rise on this issue, but the Under-Secretary provokes me. She may be saying that we would not have started from here, but if we had started with a blank sheet, surely there would have been a different result? I can see the sense in keeping the bodies separate, but did it occur to anyone that this was a great opportunity to return to first principles and to decide how to start from scratch?
 The way to do that is as for every other court. The mechanics of running a court—paying the clerks, hiring the officers and paying the judges or members of 
 the tribunal—do not vary much, whether it is the county courts, the High Court, the Court of Appeal or indeed the House of Lords. That is why there is a Court Service. So why do we need to reinvent the wheel? 
 Given that the Under-Secretary is in charge of the Bill, I found disturbing her plaintive comment that the Lord Chancellor's Department had not expressed any interest in running the Competition Appeal Tribunal.

Andrew Lansley: Does my hon. Friend recall that the reduction in the number of non-departmental public bodies is regarded as an objective in itself? One of the consequences of the proposed change is that an additional body corporate, the Competition Service, has to be created, although it could be avoided. It seems that by its nature this additional body will create an additional non-departmental public body; an additional quango, with all that tends to flow from that.

Nigel Waterson: Absolutely. My hon. Friend makes a telling point. It will be a special quango because it will have only one function; to run this small section of the judiciary, the highly specialised Competition Appeal Tribunal. I do not know how many cases the Government estimate the tribunal might have to deal with in a year, but it will be a tiny fraction of those flowing through the main court system. Why invent this nice little quango, which I presume will recruit people who already work for the Court Service who already know how to run a court? It does not matter whether the tribunal administers competition justice or commercial justice in the High Court or commercial court, because the basic principles of running a tribunal or court are much the same. I do not know who runs the industrial tribunals, but I suspect that, ultimately, it is the Court Service.
 I was on the point of expressing surprise that the Lord Chancellor's Department did not express any interest in running the tribunal. Is this because it has no confidence in the tribunal as a body, or because the Department thinks it is a waste of public money and will not work? Has anyone there been asked? It is not really a matter for anyone so elevated as the Lord Chancellor, but for the Court Service. These are the people who should be asked; they know how to run things. They do not always do so beyond criticism. As Members of Parliament, we always become slightly involved where there are problems of listing cases; although, of course, we cannot be involved in the merits. Surely the Court Service should be doing this, and not some brand new quango—as my hon. Friend the Member for South Cambridgeshire points out—that has to be started from scratch.

Melanie Johnson: I tried to answer that question in response to the hon. Member for South Cambridgeshire. In essence, he was making the same point as the hon. Member for Eastbourne. The only additional costs specific to the Competition Service structure are for a non-appointed member. The rest of the leadership team—namely the president of the CAT and the registrar—are not new people. They are currently employed by the Competition Commission and will transfer to the Competition Service. Court
 staff will not be employed, as hon. Members suggested, in relation to the possible role of the Lord Chancellor's Department in all of this.
 We believe that this provides the right degree of independence, sensibly and pragmatically, recognising the fact that we need to provide a separate body to deal with this to allow the tribunal to carry on its work in a fully independent manner. I am at a loss as to why Opposition Members are getting so excited about this point. It is a very small point.

Andrew Lansley: We are not that excited.

Melanie Johnson: I got a different impression. This is a small point. We are meeting the need for independence.
 Amendment agreed to. 
 Amendments made: No. 342, in page 128, line 13, leave out 
'Commission and the Tribunal of their' 
and insert 'Tribunal of its'. 
 No. 343, in page 128, line 17, leave out 'the Commission and'—[Miss Melanie Johnson.]

Ian Pearson: On a point of order, Mr. Beard, will the motion to transfer clause 175 be discussed before we approve the clause or afterwards?

Nigel Beard: I am advised that it is to follow.

Ian Pearson: I am obliged, Mr. Beard. I did not want to lose the clause.
 Clause 175, as amended, ordered to stand part of the Bill. 
 Resolved, 
 That clause 175 be transferred to end of line 9 on page 6—[Miss Melanie Johnson.]

Schedule 10 - The Competition Service

Amendment made: No. 345, in page 228, line 27, leave out paragraph 1 and insert— 
 '1 (1) The Service shall consist of— 
 (a) the President of the Competition Appeal Tribunal; 
 (b) the Registrar of the Competition Appeal Tribunal; and 
 (c) one or more appointed members. 
 (2) An appointed member shall be appointed by the Secretary of State after consulting the President.'.—[Miss Melanie Johnson.]

Nigel Waterson: I beg to move amendment No. 329, in page 228, line 34, at end insert—
 '(3) The appointed members must include members who have business as well as competition expertise.'.
 I am slightly lost, Mr. Beard. Did schedule 10 whiz past me? I gather that it may now be called something else. 
 The amendment is designed to amend schedule 10—I think. It is a CBI concern—we thoroughly support it—to stipulate that the Competition Service must comprise members with business as well as 
 competition experience. The Under-Secretary suggested, although I may be misquoting her, that they were looking for people with competition experience to staff the service. We can agree with that, up to a point. However, at least some of them should also have wider experience of the business world. We do not want people who have simply been civil servants engaged in competition matters, looking at things from their end of the telescope. We want people who have experience of businesses that deal with competition law, particularly with the sorts of inquiries and investigations that are under debate. In a nutshell, that is the purport of the amendment, which I commend to the Committee.

Jonathan Djanogly: I have a general question about the sort of person who is to be employed by the Competition Service. Is it the intention that they will be civil servants or secondees from the private sector, as they are on the Takeover Panel?

Melanie Johnson: The Government do not support amendment No. 329 because it focuses exclusively on business. I am conscious of the fact that the amendment was tabled before Committee Members had a chance to see our changes, for which I apologise. I hope that, because the Competition Service's role has been significantly reduced solely to that of supporting the Competition Appeal Tribunal, the hon. Gentleman will consider withdrawing his amendment.
 In respect of appointed members, there is a wide range of individuals who could usefully contribute something to the running of the service. As the amendment suggests, a business person might be able to add value, which I do not dispute. Equally, a member of the legal profession could contribute, given that the body is quasi-judicial. We may even consider appointing an existing member of the tribunal if one had an interest in playing a managerial role. In answer to the hon. Member for Huntingdon, people could come from a variety of backgrounds. Given the range of good candidates, we are reluctant to limit in statute the sorts of people eligible to apply. 
 As a result of amendments, the Competition Service will consist only of a president, a registrar and one or more appointed members, as I mentioned in earlier discussions. I hope that Opposition Members recognise the value of what could be contributed by a member of the legal profession to the body.

Nigel Waterson: The Under-Secretary makes the valid point that the significance of the body, with all due respect to its likely members, has been downgraded; that may be the wrong word, but hon. Members know what I mean. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendments made: No. 346, in page 229, line 5, leave out paragraph 3 and insert— 
 '3 An appointed member shall hold and vacate office in accordance with the terms of his appointment (and is eligible for re-appointment).'
 No. 347, in page 229, line 10, leave out 'the appointed members' and insert 'any appointed member'. 
 No. 348, in page 229, line 24, leave out from beginning to end of line 32 and insert— 
'Staff 
 6 (1) The Service may, with the approval of the Secretary of State as to numbers and terms and conditions of service, appoint such staff as it may determine 
 (2) The persons to whom section 1 of the Superannuation Act 1972 (c.11) (persons to or in respect of whom benefits may be provided by schemes under that section) applies shall include the staff of the Service. 
 (3) The Service shall pay to the Minister for the Civil Service, at such times as he may direct, such sums as he may determine in respect of any increase attributable to sub-paragraph (2) in the sums payable out of money provided by Parliament under the Superannuation Act 1972 (c.11).'.—[Miss Melanie Johnson.]

Nigel Waterson: I beg to move to amendment No. 330, in page 229, line 34, at end insert—
'subject to the principles of transparency, accountability, consistency and proportionality.'.

Nigel Beard: With this it will be convenient to discuss the following amendments: No. 331, in page 230, line 5, after 'anything', insert 'reasonably necessary'.
 No. 332, in page 230, line 6, at end insert— 
'subject to the principles of transparency, accountability, consistency and proportionality.'.

Nigel Waterson: The basic thrust of the amendments raises an important point. The CBI, which suggested them, wants to ensure that procedures followed by the Competition Service complied with the five principles set out by the Better Regulation Task Force; namely, transparency, accountability, targeting, consistency and proportionality. To anticipate something that the Under-Secretary may say, we were not particularly excited by the amendments to begin with, and are even less so now—I cannot speak for my hon. Friend the Member for South Cambridgeshire—because of the way in which the role of the Competition Service has been changed. However, it is important that the amendments are raised and that we hear the Under-Secretary's comments.

Melanie Johnson: The hon. Gentleman recognises that changes may have made this point less significant than it might have been before. The provision that the Competition Service may regulate its own procedure is required to provide the service with the power that it needs to organise its own affairs. In fact, it is an entirely standard provision. The Competition Commission has the same power under paragraph 5 of schedule 7 of the Competition Act 1998. The service also needs the power to do anything that is calculated to facilitate or is conducive or incidental to the performance of its functions. That is not a carte blanche for the service to interfere in the affairs of others but is another standard provision. Again, the Competition Commission has the same power under paragraph 8 of schedule 7 of the Competition Act 1998.
 Obviously, I agree that the principles suggested by amendments Nos. 330 and 332—transparency, accountability, consistency and proportionality—are all worthy. However, they cannot be delivered simply by writing down the words. In any case, there is a general requirement on the part of all public bodies to behave fairly. Equally, were the service ever to be the subject of judicial review, the court could consider whether it had acted proportionately. Therefore, we do not need to make specific provision for that. We are confident that we have put in place the necessary arrangements to ensure the accountability of the Competition Service. It will have an obligation to keep proper accounts and to comply with Cabinet Office guidelines as an executive NDPB. I hope that I have reassured the hon. Gentleman and that he will feel able to withdraw the amendment.

Nigel Waterson: In view of the time, I am happy to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendments made: No. 349, in page 230, line 11, leave out ''the Commission or''. 
 No. 350, in page 230, line 13, leave out ''the Commission and''. 
 No. 351, in page 230, line 17, leave out from first ''the'' to ''financial'' in line 18 and insert ''Tribunal for each of its''. 
 No. 352, in page 230, line 39, leave out from ''employment)'' to end of line 41.—[Miss Melanie Johnson.] 
 Schedule 10, as amended, agreed to. 
 Resolved, 
That schedule 10 be transferred to end of line 14 on page 186.—[Miss Melanie Johnson.]

Clause 176 - Annual report of Service

Jonathan Djanogly: I beg to move amendment No. 335, in page 128, line 28, leave out ''so far as practicable''.

Nigel Beard: With this it will be convenient to take amendment No. 336, in page 128, line 30, leave out
''in its opinion seriously and prejudicially affect''
 and insert— 
''significantly harm the legitimate business interests''.

Jonathan Djanogly: The amendments deal with exclusions from the annual report of the new Competition Service. Amendment No. 335 would delete the words ''so far as practicable'' in the second line. As I understand it, if the words are deleted, it would not be the case that the service necessarily must exclude the matters set out in subsections (a) and (b), but they must have regard to them. That is the key point. It is not an absolute situation but something that should be considered in every case.
 The purpose of amendment No. 336 is to ask why decisions about what to publish and whether something harms a person's interest should be left to 
 the Competition Service. We feel that that should not be the case. Indeed, the Competition Service may not actually know whether someone's interest may be harmed if information were to be released, so the new wording has been included. In such a situation, why should it not be the case—

Melanie Johnson: Can I help the hon. Gentleman, as it is probably fair to do so? The Government intend to oppose clause stand part because we have tabled amendment No. 354 and we no longer wish to support the clause.

Jonathan Djanogly: That being the case, should we make our comments in the clause stand part debate, following discussion of Government's amendments? I think that we probably should. On that basis I shall—

Melanie Johnson: Can I correct what I said? I am sorry; I referred to amendment No. 354. That is not correct. None the less, it is correct that we want to remove the clause on the ground that it is no longer necessary. Therefore, I can save the hon. Gentleman time.

Jonathan Djanogly: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: I shall leave it to my hon. Friend the Member for Eastbourne to ask why the clause is to disappear. I simply wanted to make one further point on the clause.
 Will the accounts of the Competition Service, which are referred to in schedule 10, be published in the report? There is no reference to any financial figures being included in the report. I thought it would be helpful if the Government could clarify their intention.

Nigel Waterson: I came in towards the end of the previous exchange. Is my understanding correct that there is to be no annual report because there is to be no clause 176? As we are all reaching for the same lever to pull the trapdoor on clause 176, perhaps we should let the Minister get on with it.

Melanie Johnson: I am grateful for the hon. Gentleman's suggestion.

Jonathan Djanogly: It might have been helpful if the Government could have presented their case before we spoke to our amendments. However, that said, I should be grateful if the Minister could explain how the financial figures set out in schedule 10 are to be released to the public if there is now to be no report.

Melanie Johnson: This matter has become slightly confused, and I must accept some responsibility. As the Competition Service will no longer provide support services for the Competition Commission, we have decided to delete the provision and replace it with a clause that requires the Competition Commission to produce an annual report. It is not complicated. New
 clause 8 will be inserted into the Competition Act 1998. Therefore, I propose that the clause should not stand part of the Bill.
 Question put and negatived.Clause 177The Commission

Clause 177 - The Commission

Amendment made: No. 355, in page 128, line 34, leave out subsection (1).—[Miss Johnson.]
Clause 177, as amended, ordered to stand part of the Bill.Schedule 11The Competition Commission

Schedule 11 - The Competition Commission

Amendments made: No. 356, in page 232, leave out lines 10 to 12.
No. 357, in page 232, line 24, leave out from 'Commission''' to end of line 27.
No. 358, in page 232, line 34, leave out paragraph 6 and insert—
 '6 Paragraph 7(4) (approval of Treasury) shall cease to have effect.'
No. 359, in page 232, line 39, leave out paragraph 8 and insert—
 '8 In paragraph 9 (staff)—
(a) sub-paragraph (2), and in sub-paragraph (3) the words ''and the President'', shall cease to have effect;
(b) in sub-paragraph (4), for paragraphs (a) and (b) there is substituted the words ''the Secretary of State as to numbers and terms and conditions of service''.'.
No. 360, in page 233, line 3, leave out
 'Paragraphs 10 (procedure) and 12 (accounts)'
Question proposed, That this schedule, as amended, be the Eleventh schedule to the Bill.
Mr. Djanogly: After the ream of Government amendments that have just been made, it would help if the Minister were to give a brief review of the purpose of the changes proposed in schedule 11, as it is a relatively short period of time since the Competition Commission was set up. For instance, I note that paragraph 5 provides that appointments to the commission have been extended from five to eight years. That seems a long time, and it is likely that the only people who will apply will be those at the end of their careers or academics and civil servants, rather than, as we discussed previously, business men leaving their businesses for a while and then returning to them.
Miss Johnson: The reason for making the changes is principally to introduce strict security of tenure in order to ensure the independence of members of the commission. That was the result of a Whitehall-wide review in July 2000, prompted by ECHR concerns. Previously, members were in practice appointed for three-year terms, with second, third and even fourth appointments. Under schedule 7, we prohibited the appointment of any person as a commission member for more than five years at a time. Appointments were subsequently made for two terms of four years only, 
with an automatic renewal after the first term. Paragraph 5 embodies that eight-year term in the schedule. I believe that it is an improvement on the existing provision.
Question put and agreed to. 
 Schedule 11, as amended, agreed to.

Andrew Lansley: On a point of order, Mr. Beard. I confess that I may have been insufficiently quick in understanding what was going on, but am I right in thinking that, because, we debated a group of Government amendments under clause 175 that included Government new clause 8, we will be held to have debated the form of the annual report of the Competition Commission? In the form presented by the Government, it does not include any of the cautionary words that my hon. Friend the Member for Huntingdon intended to propose in a debate about what should or should not be included in the commission's report.
 Only when we reached clause 176, which was subsequent to that group of amendments, did it became obvious to Opposition Members—and, it seems, some Labour Members—that the Competition Service's report was to disappear and that the report of the Competition Commission would replace it. We were therefore being invited to discuss the deletion of the annual report under clause 176—after the point at which we had agreed to include the report of the Competition Commission. We were seeking to debate that point under a false premise. I wonder whether it would be in order for us to debate Government new clause 8 separately.

Nigel Beard: A new clause that has been grouped would not normally be debated again, but I shall consider the hon. Member's point of order and respond later.

Nigel Waterson: I beg to move amendment No. 338, in page 129, line 19, leave out
'such other persons as he considers appropriate'
 and insert 
'other interested parties or their representatives'.

Nigel Beard: With this we may take amendment No. 339, in page 129, line 34, leave out
'such other persons as he considers appropriate'
 and insert 
'other interested parties and their representatives'.

Nigel Waterson: Bits keep falling off the Bill. We lurch into the last half hour of the debate and, on my arithmetic, we have about 24 clauses and schedules to get through.
 I hope that the purpose of amendment No. 338 is clear. It would narrow the discretion of the chairman of the Competition Commission to decide on its rules and procedures and make it clear that it is not entirely up to him whom he consults. It is much less important than it might have been, thanks to the shift in the role 
 and importance of the Competition Commission that was brought about by clauses that we have already debated. 
 Much the same points may be made about amendment No. 339. There should be a specific obligation to consult interested parties before issuing the rules and procedures.

Melanie Johnson: In this area of the Bill, we have a choice between a flexible, common-sense consultation provision and a more prescriptive measure that would require the Competition Commission to act in a certain way. In helping the Committee to take a view on that, it might assist if I outline how the Competition Commission chairman plans to develop the rules of procedure.
 Later this year, there will be a formal consultation process with members of the Competition Commission about the rules. However, the chairman also intends to hold a wider public consultation. The draft rules are to be placed on the commission's website and there will be an accompanying press notice, explaining the consultation process and inviting views. The commission has confirmed that it will consult those who responded to the competition White Paper published last July. The respondents included business organisations, law firms, trade unions, other regulators and consumer groups. The Competition Commission's plans will, therefore, ensure that a broad cross-section of interested parties are consulted. The consultation will not be limited to parties who are likely to engage directly in mergers and their representatives, but will extend more widely. For those reasons, I do not agree with the sentiments expressed by the hon. Member for Eastbourne, whose amendment is more prescriptive. The broad formulation adopted in the Bill avoids the need to define terms such as ''interested parties or their representatives''. I hope that, with that clear expression of intent in this regard, Opposition Members will be reassured about how the draft rules will be developed and will agree that the amendment is unnecessary.

Nigel Waterson: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Melanie Johnson: I beg to move amendment No. 195, in
 page 129, line 43, after '1973 (c. 41)' insert 
', section 32 of the Water Industry Act 1991 (c.56)'.
 The amendment extends the duty of the Competition Commission chairman to make and publish rules of procedure to regulate the conduct of Competition Commission reference inquiries. It extends that duty to include rules for mergers referred under the special regime set out in clause 66 for assessing mergers between water enterprises. 
 Amendment agreed to. 
 Clause 178, as amended, ordered to stand part of the Bill.

Schedule 12 - Competition commission: certain procedural rules

Melanie Johnson: I beg to move amendment No. 196, in page 234, line 22, after 'group' insert '—
 (a)'.

Nigel Beard: With this it will be convenient to take Government amendments Nos. 197 and 198.

Melanie Johnson: The amendments correct a minor technical inaccuracy in the drafting of schedule 12 and are necessary to reflect the fact that the Competition Commission carries out investigations, not references, under the Financial Services and Markets Act 2000.
 Amendment agreed to. 
 Amendments made: No. 197, in page 234, line 23, at end insert '(l) and'. 
 No. 198, in page 234, line 25, after 'Act;' insert 'or— 
(b) under a provision mentioned in paragraph (m) of that definition;'.—[Miss Johnson.]
 Schedule 12, as amended, agreed to.

Clause 12 - The Competition Appeal Tribunal

Nigel Waterson: I beg to move amendment No. 28, in page 6, line 5, leave out 'Secretary of State' and insert 'Lord Chancellor'.

Nigel Beard: With this it will be convenient to take amendment No. 29, in page 6, line 7, leave out 'Secretary of State' and insert 'Lord Chancellor'.

Nigel Waterson: We move into the part of the Bill that deals with the establishment of the Competition Appeal Tribunal, which is a wholly separate and specialist tribunal—really a court—within the English legal system. I want briefly to discuss the amendments before discussing the concept of the tribunal in a stand part debate, taking into account the limited time available to discuss the rest of this set of clauses and schedules and the next part of the Bill. That struck me as the most sensible peg on which to hang such a debate in part 2 of the Bill.
 The amendments are easy to follow, and would mean that appointments were made by the Lord Chancellor rather than the Secretary of State. Despite the Lord Chancellor's occasional problems in the DIY field, we believe him to be at least nominally more independent than the Secretary of State. The appointments should not only be as independent as possible but should be seen to be. It is a modest amendment, and I hope that it will find favour with the Under-Secretary.

Melanie Johnson: I am not clear what the hon. Gentleman thinks that the amendment would do. As hon. Members can see from the clause, the Lord Chancellor has already been given an active involvement in appointments to the CAT in that he
 will be responsible for appointing the tribunal's president and panel of chairmen. Previously, the Secretary of State made all appointments to the CAT, or CCAT. She consulted the Lord Chancellor before appointing the president but, otherwise, independently appointed chairmen and ordinary members. The Secretary of State will in future appoint only ordinary members.

Andrew Lansley: Will the Under-Secretary confirm that hitherto, under the Competition Act 1998, the CAT has not under any circumstances heard appeals from decisions of the Secretary of State, although it has heard them on decisions from the OFT under the chapter 1 and 2 prohibitions? Under the Bill, will the CAT consider appeals on grounds of judicial review from decisions by the Secretary of State?

Melanie Johnson: I can confirm that that is right.
 The hon. Gentleman may want to understand why I think that the division of responsibilities between the Lord Chancellor and the Secretary of State is the best approach. The Lord Chancellor makes the appointments requiring legal qualifications when his expertise is at a premium; his involvement should ensure that we attract candidates of the highest calibre to be chairmen. However, the Secretary of State is the person best placed to appoint ordinary members, as they will not necessarily bring with them a specific legal expertise. They will be required to have expertise relevant to competition and will continue to be drawn from a range of backgrounds, such as economics, business, accountancy and law. 
 The Secretary of State will also continue to finance the tribunal and to monitor its expenditure and cost effectiveness, which is why the Secretary of State should appoint the registrar, who will be the tribunal's senior official and act as accounting officer for both the tribunal and the Competition Service. We have strengthened the measures already in place to ensure that ordinary members, the chairman and president can carry out their duties without external influence being brought to bear. The only grounds for removing any member from office will be incapacity or misbehaviour. Members and chairmen will be appointed for one eight-year term with no reappointment; previously, members were appointed for shorter terms and then reappointed. The president will be appointed on the same terms as a High Court judge—in other words, until he retires. 
 The system provides a strong set of safeguards that will ensure the integrity of the tribunal's decisions and the best division of responsibilities in order to secure the required level of legal and competition expertise in the tribunal. I hope that I have persuaded the hon. Gentleman to withdraw the amendment. If not, I shall seek to oppose it.

Nigel Waterson: I am happy to beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Nigel Waterson: I have already flagged up the fact that this seems to be the most appropriate place in which to have a full stand part debate on the concept of the Competition Appeal Tribunal, why it is provided for, what its function is, and in what way it is supposed to be an improvement on what has gone before. That seems to be our only option, given the guillotine that will fall in 25 minutes or so.
 The role of the Competition Appeal Tribunal seems to have changed during the drafting of the Bill. It is a novel concept in the English legal system, so it is important that we consider carefully how it will slot into that system. It will be an important entity, with its own quango to look after its organisation, and it will deal with some important issues. It was originally conceived, as the name suggests, as an appeal tribunal to protect against unfair or unreasonable findings of the Competition Commission. That seems entirely proper. However, it is also being asked to fulfil a different role—that of a court of first instance. It is being asked to adjudicate on claims for damages following a finding by the OFT that a super complaint is justified. What is more, the OFT's findings of fact cannot, apparently, be challenged on that basis. The only safeguard, which seems to us to be inadequate, is that a damages claim cannot be heard until the appeals process is concluded. 
 Our first major question is whether the CAT is to be an appeals court or a court of first instance. Apparently it is to be a bit of both. That has the potential to be contrary to basic principles of fairness and due process of law. More practically, the two things call for different skills on the part of the judges or those who will be sitting in a quasi-judicial capacity. There is a world of difference between those who sit at first instance in any part of the legal system and those who sit in the appellate courts, as the Court Service and even the Lord Chancellor's Department, if so minded, might tell the Under-Secretary if she asked them. That is reflected not only in the seniority of those who sit in appellate courts as opposed to the courts of first instance, but in their remuneration. I should be grateful if she would expand a little on how the skills are to be provided in the relatively small structure of the CAT. 
 I am sure that the Under-Secretary will say that those involved will form a highly specialised group of people with expertise that will look on a regular basis at a narrow part of the law. I do not disagree; that is fine. However, that is entirely different, lest she try to elide the two points, from my point about the difference between the skills required—whatever the subject—of judges of first instance and of judges on appeal. 
 Our view, although we shall not get too excited about it, is that claims for damages ought to be heard in properly constituted, regular courts of law, not least because they are used to dealing with such claims. Although there will be an element of expertise in considering such cases, the fundamental rules in English law on how claims for damages are calculated, how the quantum is arrived at and how questions of remoteness and liability are resolved are pretty 
 standard and need not overly tax judges in the rest of the legal system. It is clear, however, that as the tribunal is presently set up, it will indeed have the power to award damages to those injured by breaches of either UK or EC competition law. That will place an extra layer on top of the current system because the civil courts already have the power to award damages in those situations. 
 Again, is it simply because the body is to be specialist that it is thought that it will dispense a better sort of justice? Is it thought that the pressure of cases will be too great for the existing court system? I do not think that anyone could fail to be impressed by the ability of even the most run-of-the-mill, first-instance, High Court judge to grasp in a short space of time the essentials of cases that may be based on a series of different aspects of the law. 
 Will the Under-Secretary also confirm that there were very few civil claims under the pre-1998 law? She may have the figures at her fingertips, or they may be at somebody's fingertips. The number of claims brought since then has not been significantly higher. Establishing a breach may not be difficult because the claimant can rely on an OFT or European Commission ruling, but proving the loss would be difficult. For example, a retailer who has been charged more than the market price as a result of a cartel may suffer no loss because they have passed on the increase to their customers. The ultimate consumer is the only person likely to be able to demonstrate a loss in such circumstances, but a price increase higher up the distribution chain may be a very small element in the price that they pay. They would therefore have very little incentive to sue. 
 Another issue, which would have arisen naturally under one of our amendments, is whether a remedy that is readily available in the civil courts—injunctive relief—should be available to the Competition Appeal Tribunal. I think that I am right in saying that it is not currently envisaged that the tribunal should have such a power, but it ought to be able to step in to stop or prevent something happening by issuing an injunction. 
 We have already had a significant debate about the possibility of importing something like class actions in the United States law into English law, so I do not want to develop that any further at this stage. Suffice it to say, we wonder whether schizophrenia is involved in the role of the CAT, as it will have a function in both the first instance and in an appeal. 
 On dealing with claims for damages, are we simply reinventing the wheel? Perhaps those matters are best left to the existing court system, which is capable of dealing with them. It does not seem likely that the number of additional cases will be sufficient to put extra strain on the court system as it stands at the moment. Given the complexity and cost of setting up the life-support system for the tribunal in the first place, are the Government going too far in extra cost and resources when they could achieve the same result more cheaply through the existing court system? Those are some of the themes that we would wish to develop, particularly if we had the chance to discuss some of our 
 other amendments to what is, after all, a very important part of the Bill that deserves thorough scrutiny in Committee.

Andrew Lansley: I want to say a word or two about the constitution of the Competition Appeal Tribunal as set out in clause 12. The Government have moved from the position under the Competition Act on who appoints the president of the tribunal and the panel of chairmen to direct appointment by the Lord Chancellor, rather than by the Secretary of State—although the Secretary of State will continue to appoint a panel of ordinary members to the tribunal. In making that move, Ministers must have understood that the independence of the tribunal from the Secretary of State had some value, but the logic of that does not appear to have been followed through. If the Lord Chancellor is to determine who has the appropriate legal background to become president of the tribunal, or to act as one of the panel of chairmen, and that person is independent from the Secretary of State, it would be more appropriate for that person to hear appeals on grounds of judicial review against decisions that come to the tribunal under the legislation.
 The Committee will recall that the Competition Appeal Tribunal, in addition to the damages hearings referred to by my hon. Friend the Member for Eastbourne, hears appeals against decisions taken under the Competition Act chapter 1 and 2 prohibitions, and hears them under circumstances where it considers the merits of the case. The panel consists of a chairman with legal experience approved by the Lord Chancellor, and ordinary members appointed by the Secretary of State, who have the appropriate knowledge of competition law, practice and, by extension, economic expertise. However, under the Bill, appeals will be heard on grounds of judicial review, rather than the wider grounds of again hearing the merits of the decision. In particular, we will hear appeals on grounds of judicial review against decisions made by the Secretary of State that will not necessarily have been taken by the OFT or the Competition Commission. 
 The need for those panels to be different should be obvious. The demand for economic expertise is less, the demand for competition law expertise might still apply and the demand for legal qualifications should be manifest. That would seem to point to a panel constructed entirely of those who are qualified to be president or to be in the panel of chairmen. The advantage of going down that route is that one would be constructing a panel consisting entirely of those appointed by the Lord Chancellor rather than by the Secretary of State, so the independence of the panel from the Secretary of State, and the issue of reappointment by the Secretary of State, could not be held to rights. 
 It would be very strange if a judicial review against a decision of the Secretary of State were heard by a panel whose members were due to come up for reappointment by the Secretary of State at some early 
 point. There are many people who would regard as substantive the difference between that sort of judicial review and the sort formerly available to a High Court under the Fair Trading Act, where the judge is not susceptible to reappointment by the Secretary of State who took the decision. It is not a very long step from the Bill to a point where it is clear that if hearings are going to go to judicial review, the panel should consist only of a president or those appointed to the panel of chairmen for the tribunal.

Jonathan Djanogly: I concur with both my hon. Friends. There will clearly be problems in working out the constitution of the appeal court and the court of first instance.
 I would like to discuss the question of the length of the appointment. Eight years has been suggested. I am not entirely sure that that is the right period, or that it will encourage the best people for the job to come forward. As my hon. Friend the Member for South Cambridgeshire just mentioned, and bearing in mind his accurate description of how the system will work, those who come forward will mainly be lawyers. To that extent, one wonders how many barristers will want to take eight years out from their more lucrative practice rather than do what they would normally: become a judge and, in effect, have a permanent job. Eight years seems to be an unusual period for which to attract people to leave their professions, if they are then expected to go back to them. If it is expected that they will not go back to their professions, people of an older age, who might, although not inevitably, be the best people for the job, are likely to be attracted. If they are the best people for the job, it is likely that they are judges anyway. I should like to hear the Under-Secretary's comments on that. 
 Even if an eight-year period were to attract the right sort of person, I am not entirely convinced that, as other areas of law go, such a period would be best practice. Company directors, under the Companies Act, have a maximum fixed tenure of five years, but best practice recommendations are now normally for one year. The question is how to view such appointments. Will people stay for the long term, or come in to give their experience and then leave, as happens with non-executive directors and, to a greater extent, the Takeover Panel, for which the average stay for those coming from the private sector is between one and three years? I should like to hear the Under-Secretary's views on whether the proposal is likely to attract the best people and whether it fits established best practice in other areas.

Melanie Johnson: As Opposition Members have recognised, the Competition Appeal Tribunal will be able to hear appeals against decisions made by the Director General of Fair Trading in Competition Act cases. In addition, it will have new functions, and it is probably worth my while running through them.
 The Competition Appeal Tribunal will be able to hear claims for damages in competition cases where a breach of competition law has already been established. It will hear applications for the review of decisions taken by the competition authorities in 
 market investigations and merger cases. It will hear appeals from parties that have been fined by the OFT or the Competition Commission for late provision or non-provision of information. 
 It is because of those new duties, which include the scrutiny of decisions made by the Competition Commission, that it is so important for the CAT to be independent of the commission. There must be no question of a lack of impartiality on its part. Opposition Members have recognised that. To achieve that impartiality, the existing membership of the Competition Commission will be divided into two distinct groups—one for appeals and one for all the other activities that I mentioned a moment ago. 
 Members of the appeal tribunal will no longer be members of the Competition Commission, and will work exclusively on appeals, with no involvement in Competition Commission investigations. That is a change from the current situation, under which it is possible to be a member of a Competition Commission reporting panel and of the appeal panel. The change will provide a considerable degree of separation, which I hope reassures Opposition Members that we have in mind, and have addressed, similar concerns to theirs. 
 On the point made by the hon. Member for Huntingdon, the CAT appointments will be on a part-time basis. Its members will not sit full-time, so they can continue with their day jobs. His point about what it is possible to get lawyers to do is counterbalanced by the presence of many lawyers in this House, who could probably be earning greater sums of money outside it. [Interruption.] The hon. Member for Eastbourne may deny that, but I think that we are all clear that my suggestion is probably correct. 
 The damages role is to provide a quicker, more accessible route for damages claims. So far, there have been no successful claims in the courts in 30 years, so it is important to accept, bearing in mind the points made by the hon. Member for Eastbourne, that the courts are not really working in that regard. It would not make sense to have provision on the existing basis because that has not facilitated any damages claims being dealt with.

Nigel Waterson: I nearly missed the Under-Secretary's leap in logic. The fact that claims have not been brought for 30 years does not necessarily mean that that is the courts' fault. Perhaps there was no merit to the claims. The courts' job is to hear, within reason, whatever is put in front of them. Surely the Under-Secretary is not suggesting that the courts have somehow discouraged those claims. Is she suggesting the opposite? Having conceded that these chaps will be divided into two groups—the appeal court and the first instance court—will the first instance court be trying to drum up trade?

Melanie Johnson: I made no such suggestion. I said that it is important to provide a quicker, more accessible route. It is not the court's or the existing tribunal's problem that no claims for damages were made during the past 30 years. However, there may be aspects of the
 process that make it unattractive to people to bring such claims. We are determined to make it easier for people to bring claims that can be dealt with efficiently through a more accessible system.
 The CAT will have a highly qualified president and a legally qualified chairman, and the ordinary members will have competition expertise. There will be detailed rules of procedure, which will be quicker than the courts and more innovative. We hope that a strong track record will be built up in all areas of responsibility. The Lord Chancellor will run a competition for new appointees to serve as chairman with a view to identifying a panel of chairmen in time for commencement of the new regime.

Andrew Lansley: The Under-Secretary seems to have passed over the points that I made. She either did not understand them or, having understood them, has not addressed them. My point was that, in addition, the Competition Appeal Tribunal may hear appeals against decisions made by the Secretary of State, not just by the Competition Commission. Does she agree that in those circumstances logic demands that the panel for such cases should consist of members appointed by the Lord Chancellor and not by the Secretary of State?

Melanie Johnson: I was coming to that point and I assure the hon. Gentleman that I shall reflect on it. The fact is that there will be a competition for appointees. It will be open to applications from all suitably qualified individuals, and we hope that it will attract candidates of the highest calibre, perhaps including some members of the judiciary. The CAT is a key pillar of the world-class competition regime that we are creating in the Bill. The CAT's rapid and expert involvement in assessing decisions of the competition authorities will ensure the integrity of the whole system. I urge hon. Members not to support the amendment but to support the clause unamended.

Nigel Waterson: I do not want to take up too much time--[Interruption.] Two important points arose in the Under-Secretary's comments, although with respect to her, it was rather like drawing teeth. First, there will be two types of people on the tribunal: the appeal people and the first instance people. Presumably, they will not mix--or mess together as barristers would say--or have any contact, and there may be Chinese walls to ensure that. Secondly, there is a possibility—even a likelihood—that those on the appeal side will have served as judges. So why not allow the judiciary to deal with the matter in the ordinary way? Those two points are new.

Melanie Johnson: I said when commenting on appointments that people could end up sitting on either side of the division that we envisage—and not as the hon. Gentleman said. I can only reiterate that we believe that the process will be shorter and quicker, and meet the requirements for separation and
 independence. The right degree of expertise will be available to the Competition Appeal Tribunal, whether it considers appeals or other matters.
 Question put and agreed to. 
 Clause 12 ordered to stand part of the Bill.

Schedule 2 - The Competition Appeal Tribunal

Nigel Waterson: I beg to move amendment No. 48, in page 184, line 29, leave out
'or any other relevant law and practice'
 and insert 
'or commercial competition economics or business experience'. 
I am happy to move this amendment in the time available. It is important, and the CBI and others would agree. Given the specialist nature of the tribunal, only those with in-depth knowledge and expertise of competition law or business more generally should be entitled to adjudicate in competition law disputes. That is in line with the Government's commitment to business representation on other recently established bodies such as the Monetary Policy Committee of the Bank of England and the learning and skills councils. I hope that this modest amendment will find favour with the Under-Secretary.

Andrew Lansley: I agree with my hon. Friend, but I would not necessarily delete
''other relevant law and practice''. 
As he will have deduced from my earlier remarks, I believe that some knowledge of administrative law relating to judicial review could be relevant for the new purposes of the tribunal— 
 It being Seven o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June 2001] and the Order of the Committee [16 April 2002], to put forthwith the Question already proposed from the Chair. 
 Question put and negatived. 
 The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time. 
 Amendment made: No. 361, in page 185, line 24, leave out: 
'with the approval of the Treasury'.—[Miss Johnson.]

Schedule 14 - specified functions

Amendments made: No. 386, in page 236, line 31, at end insert: 
'Chapter 3 of Part 10 and Chapter 2 of Part 18 of the Financial Services and Markets Act 2000 (c.8).'
 No. 387, in page 236, line 33, leave out from 'of' to end of line 2 on page 237 and insert 'that Act'.—[Miss Melanie Johnson.] 
 Schedule 14, as amended, agreed to. 
 Clauses 229 to 231 ordered to stand part of the Bill. 
 Schedule 15 agreed to. 
 Clause 232 ordered to stand part of the Bill.

Clause 233 - overseas disclosures

Amendments made: No. 381, in page 163, line 35, leave out 'and'. 
 No. 382, in page 163, line 35, at end insert: 
'and such subordinate legislation as is specified by order for the purposes of section 228(1)'.
 No. 383, in page 163, line 38, leave out from 'any' to end of line and insert: 
'such enactment or subordinate legislation'.—[Miss Melanie Johnson.]
 Clause 233, as amended, ordered to stand part of the Bill. 
 Clause 234 ordered to stand part of the Bill.

Clause 235 - Competition information: considerations relevant to disclosure

Amendment made: No. 384, in page 164, line 3, leave out from 'any' to end of line and insert: 
'specified information (within the meaning of section 228(1))'. —[Miss Melanie Johnson.]
 Clause 235, as amended, ordered to stand part of the Bill. 
 Clauses 236 and 237 ordered to stand part of the Bill.

Clause 238 - repeals

Amendment made: No. 385, in page 165, line 11, leave out 'section 55' and insert 'sections 55 and 56'.—[Miss Melanie Johnson.] 
 Clause 238, as amended, ordered to stand part of the Bill.

Nigel Waterson: On a point of order, Mr. Beard. It will not have escaped your attention that due the guillotine, to which we are all subject, a tranche of clauses and schedules has been denied any debate. The Committee did not discuss part 9 at all. Some time could have been saved and used on those provisions if the Government had given us some inkling earlier in the debate of their proposed changes to the Competition Service.

Nigel Beard: That is not a point of order, but I am sure that the Under-Secretary has heard those points.

Ian Pearson: On a point of order, Mr. Beard. We have considered the Bill at great length. If the Opposition had not spent nearly five hours discussing clause 20, we could have reached the information provisions in enough time to scrutinise them in detail.
 Further consideration adjourned.—[Mr. Pearson.] 
Adjourned accordingly at five minutes past Seven o'clock till Thursday 9 May at half-past Nine o'clock.